By Robb M. Stewart and Paul Vieira

OTTAWA–Canada’s housing market continues to show signs of recovery, with sales rising modestly last month in what looks set to be a soft year overall for resale activity.

National sales of existing homes edged up 0.5% in June from the month before, the Canadian Real Estate Association said Wednesday.

After a weak start to the year for sales, the latest advance builds on a 5.5% jump in sales in May and a 0.9% rise in April to put nationwide activity roughly 7% above where it stood in March, the association said.

“June’s housing numbers continued to build momentum following the late start to the year in May, with virtually every metric moving in the right direction,” Shaun Cathcart, CREA’s senior economist, said.

Fixed mortgage rates have eased from the recent peak in April, and interest-rate increases from the Bank of Canada look less likely than they did just a month ago, which is positive for prospective buyers, Cathcart said.

Despite the optimism, the real-estate association revised slightly lower its projections for the housing market this year, following what it said was a delayed start to a long-awaited recovery that should still see a rise in activity in the second half of 2026.

While sales have now risen to their highest level since the beginning of the year, they remain 11% below their 10-year average and under the pre-pandemic benchmark, said Alexandra Ducharme, economist at National Bank of Canada Capital Markets.

“June’s slight increase reinforces our view that the market bottomed in the first half of the year. Indeed, improving affordability conditions appear to have encouraged previously sidelined buyers to re-enter the market, particularly in Ontario,” Ducharme said.

The Bank of Canada on Wednesday left its policy interest rate unchanged for the sixth time in a row. Central bank officials expect consumer spending to remain solid, as the housing market shows signs of stabilizing after a stretch of weakness.

“We don’t expect the housing market to be a big boost to growth going forward,” Bank of Canada Gov. Tiff Macklem said. “But what we are seeing in the housing market is, after a period of decline, is it is stabilizing. So it isn’t going to be subtracting from growth.”

The bank now projects the economy will grow 0.7% this year following a mild contraction in the first quarter, a cut to its prior forecast for expansion of 1.2%. It is expecting growth to accelerate to 1.8% in both 2027 and 2028.

Senior Deputy Gov. Carolyn Rogers said Canada has had an affordability problem with housing which has had a dampening effect on past cuts to interest rates than might otherwise have been the case.

“We also have this overhang of uncertainty. Housing is probably the biggest purchase most people will make, and if you’re in a period of uncertainty, your inclination to make that purchase is less,” she said.

Home sales in June on an unadjusted basis were 0.9% above year-earlier levels, but the real-estate association said the number of newly listed properties slid 1.1% month-over-month, a second consecutive fall. CREA said there were 208,578 properties listed for sale across real-estate systems at the end of last month, up 0.6% from a year earlier and 0.8% above the long-term average for the time of year.

The association’s data indicated that benchmark house prices, calculated in a similar fashion to the S&P Cotality Case-Shiller National Home Price Index, were unchanged from the prior month and down 3.6% on the same month last year.

CREA said it now expects 463,336 residential properties to change hands this year. That would represent a slight fall of 1.4% from last year, and marks a change from a mid-April forecast for a modest rise in sales.

The shift reflects a faster-than-expected slowdown in activity in regions facing a sharp reduction in population growth and historic supply shortages, specifically Quebec and the East Coast, the association said. Ontario is now the only province forecast to see sales rise in 2026.

The association projects the national average home price will rise by 1.1% on an annual basis, to 688,710 Canadian dollars (US$486,429) this year. That is little changed from its April forecast and covers declines of less than 1% in British Columbia and Ontario and slowing price growth in other provinces, it said.

For 2027, CREA estimates home sales across the country will climb 3.7%, to 480,567, while the average home price looks set to rise 1.1%, to C$694,164.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

07-15-26 1323ET